Fuelish Decisions

Non-pilots are usually surprised to learn that the most involved and challenging part of flying sometimes takes place on the ground rather than in the air. Preflighting the aircraft, making weather decisions, filing flight plans, programming avionics, navigating the taxiways at a complex airfield, ensuring regulatory compliance, and so on. This is probably as true for the airline pilot as it is for the light GA aircraft owner.

In the world of corporate and charter flying, things are a little different. Based on my experience, the time suck award goes to the fuel purchasing process. Surprised? I don’t blame you. It’s counterintuitive to think that buying gas would involve any challenge whatsoever, especially when you’ve got a large team of dispatchers at your disposal. How hard could it be? Just see where the fuel is cheapest and buy there, right?

I wish.

For better or worse, the FBO’s advertised cost of fuel is rarely the price we pay. If we’re at a large chain like Signature Flight Support or Atlantic Aviation, the sheer volume of jet fuel we buy in a year gives us the power to negotiate for lower costs. A Gulfstream IV burns about 500 gallons per hour and our fleet has more than 50 aircraft flying an average of perhaps 500 hours annually. Do the math and you’ll see why the major chains are willing to discount significantly to earn a piece of that business.

Our flight releases provide the negotiated rate, so that part of the process is simple. But sometimes – typically at the smaller chains and independent FBOs — we’ll be using contract fuel through UVair, World Fuel, or other such entity.

A rare sight: over-wing (also known as “gravity”) fueling. We took on about a thousand gallons during this stop in Alaska. It took about 90 minutes to add the fuel via the gravity fueling ports. Normally a thousand gallons would take about 5 minutes to upload through the pressure port underneath the right wing.

The irony of fuel contracts is that the people who are pumping the gas can’t tell you what it costs. Ask the employee at the front desk how much a gallon of fuel will cost with that Avfuel release and they’ll just shrug. The price varies depending on the specifics of each operator’s agreement with Avfuel. It reminds me of our medical system, where the physician who’s performing a procedure or check-up would be unable to tell you how much it’ll set you back – even after the treatment is over. Could be a hundred dollars, could be a thousand. Maybe it’s ten thousand.

Again, I can determine our contract fuel price by inquiring with my company’s dispatch staff. The next question is whether to buy fuel or tanker it. This computation is a bit more complex. Carrying extra fuel makes the aircraft heavier, so while it might save you from having to purchase more expensive gas at your destination, you’ll also burn more fuel enroute in order to do it. Some pilots rely on smartphone apps or spreadsheets, others have rules of thumb for their specific aircraft which dictate the conditions under which it makes sense to tanker. A heavier airplane can’t cruise as high, either, so if thunderstorms, turbulence, and/or adverse winds are part of the mix, the decision-making process goes even deeper. Beyond the safety and comfort aspects, is saving the money worth potentially having to circumnavigate weather at FL390 instead of going over it at FL450?

Another part of the fuel purchasing decision process involves the seemingly arbitrary costs imposed by FBOs. There are landing fees, ramp fees, handling charges, infrastructure costs, and more. Some of them are dictated by the airport itself, others are left to the discretion of the FBO. Certain costs be waived, others cannot. At my home airport, the instant our G-IV hits the ramp, a $700 handling cost is assessed. This is pretty typical.

Some FBOs charge less… but then, I’ve also paid more than twice that at places like San Francisco International. Oh, they’ll be happy to waive it, but you have to purchase hundreds of gallons of fuel (SFO is currently charging $7.60/gal for Jet-A; if you’re using avgas it’s $8.00). Internationally, the highest handling fee I’ve seen was well over $3,000.

The type of trip will help dictate whether I try to offset the handling fees. If it’s a non-revenue (Part 91) flight for the owner, I’ll include the handling fees in my math since they come out of his pocket. If it’s a charter trip, the cost is paid by the customer, so I’ll usually ignore the handling charge and make the decision based solely on obtaining the lowest possible fuel price.

Every now and then I’ll run into a fee I’ve not seen before. I was at Dallas Fort-Worth Airport recently and noticed that their fuel price was something like $1.90. I later discovered that they added a $0.40/gallon “fuel surcharge” to the base cost. This fee is fairly common abroad, but I’d not seen it before in the U.S. At least, not that I recall. This surcharge boosted the price by 21% and shifted the cost/benefit analysis considerably.

Speaking of which, sometimes despite our best efforts, we end up buying the most expensive fuel through no fault of our own. There are several ways this can happen. For example, my home airport recently got a new FBO, and despite being based there, they charged us the non-tenant rate for fuel because of a technicality regarding a lease agreement. Lesson learned.

Sometimes a fuel release won’t be honored. I’ve had that happen in Africa, where a discrepancy between the company name on the fuel release (we use a DBA) and the one on our other paperwork caused the fueler to refuse it. Try explaining the intricacies of a corporate DBA to an African fuel truck driver who speaks no English at 3:00 a.m. during a tech stop. It’s quite comical.

The most common way we get hosed on fuel pricing is when we purchase or tanker gas in anticipation of a specific itinerary only to have the airports and FBOs change after the fact. Changes are part of the nature of charter flying — there’s not much we can do about that — but it still stings to know we could have saved a ton of money if only we’d known an hour earlier that we’d be going to Airport “B” instead of Airport “A”.

Fuelish decision making is a critical part of corporate and charter aviation. Next to safety-related considerations, it might even be the most important, especially for the large cabin/long range airplanes. It’s certainly one of the most variable. Fueling up in the wrong place can turn a profitable trip into a four-figure loss, and that’s something nobody wants.

There’s another motivation at play, too – a personal one: I want to reward the FBOs which provide low prices and encourage the less competitive ones to consider why they aren’t getting my business.

Related

Post navigation

13 comments for “Fuelish Decisions”

Thanks for the fascinating insights. For no real reason, I’d kind of assumed that the customer would just pass his platinum card out the window to pay for fuel (much like my wife does to me at the service station)… Of course not! You’ve revealed another of challenges to making – or at least maximising – a profit in a tough business. And you’ve shown what a unique style of gold-braid white-collar dirt-under-the-fingernails flying the corporate charter world is.
On an entirely different level, I can see that while biofuels might help save the planet, and they might even save us from the current crop of oil oligarchs, they’re not going to save the aviation industry from itself.

I wish it was as easy as passing a credit card out the window like Peter Graves so famously did in Airplane!. Part of the problem is that Jet-A varies so widely in price. Over the last month or two I’ve paid as little as $2/gal and as much as $5-something/gal. If auto fuel was like that, I’m sure a lot more shopping around would take place. But for the most part, automobile fuel hovers within a pretty narrow range, regardless of where you go within a geographical area.

That factoid alone should be enough to convince anyone that competition does more than anything else to level the playing field and help the consumer. Alas, some FBOs still claim — with a straight face, no less — that their $8/gallon fuel really does reflect the actual cost of providing it. I assume they also have a bridge for sale…

Great insight regarding biofuels! I predict that if/when they come to market, you’ll see the same discrepancy in pricing.

Yup, it sounds like finding favourable winds aloft would be less of a hassle…
Of course the key to mogas prices, and the competition that drives them, is demand – and that’s where aviation is really missing out. As prices get driven up participation gets driven down, which drives prices up which… yeah, ouch. I wish I knew of a solution.
In the meantime, how about we brainstorm some spurious fees for servicing electric airplanes… Battery swap surcharge? LiPo levy? Terminal tightening tax?

I would be surprised if The Powers That Be aren’t already salivating over the prospect of regulation and taxes for electric aircraft. It’s doubtful they’d ever see the kind of subsidies that electric cars have enjoyed.

A few years ago — when 100LL prices were at their apex — someone put together a chart comparing the price of avgas and mogas over the years, along with an opposite scale showing consolidation in the FBO business. Wish I could find it. Anyway, you won’t be surprised to hear that it demonstrated the very thing you’re talking about: less competition results in higher prices. Econ 101, right?

Totally. I’d love to see that chart. It would be fun to compare the march of gas prices with other things too…

Mike

May 30, 2017 at 8:34 pm

Ron, I can see that you are very aware of your fuel + other ramp fees…but why isn’t your flight department stepping up to the plate? You as the pilot having to make these decisions is muddling up your aviation duties my friend.

I hope it doesn’t come across that way. Our dispatchers research and provide the fuel pricing, whether it’s a fleet discount or a contract arrangement. Then actual decision about how, when, and where to take on fuel has to be left with the crew, because the decision has to take into account flight planning factors, and our dispatchers don’t make those calls. I believe it’s easier for dispatcher to take on that role in a 121 operation since the schedule and destinations are fixed, but with the variability of 135/91 flying, I don’t know if it would be feasible.

Being the typical Type-A control freak, I’d rather do it myself anyway. 🙂

Speaking of dispatchers and operations types, I don’t envy their job. It seems to be an endless stream of paperwork, emails, administrative bloat (customs, immigration, etc.), and of course once they get it all handled, the trip parameters frequently change and they have to rework half of it anyway. The flexibility of 91/135 operation comes with a price, and they as much as anyone pay for it with all the work they have to do. I try not to be the whiny pilot who adds to their workload, but it’s not always possible. Sometimes you just need the support that only they can provide with their magic keyboards.

Piston engine fuel, better known as “avgas”, is actually more expensive than jet fuel. It’s one of the only remaining fuels contains lead, and there aren’t many places which produce that component anymore. The lead is required to raise the octane high enough to prevent detonation in high-performance reciprocating engines.

Another reason for the high cost: the number of gallons consumed in a given year is far less than for jet fuel, so avgas has devolved into somewhat of a “boutique” product. Lower production quantities mean higher per-unit cost. Sometimes I’m amazed that it’s not even more expensive than it is. Overseas, it can be quite hard to find avgas, and when you do find it, it’ll cost 3-5 times what you’d pay here in the U.S.

I think avgas is going to be disappearing soon; the FAA is working with a couple of companies on a lead-free replacement.

As someone who operates a fueling facility on an Australian Airport with a mix of commercial and private operations on it, I can tell you all , I am confused as much as you.
I do into plane deliveries and hold stocks in a fuel farm for two major international players.
The only prices I see are published on the internet (if I care to look) Sales are handled very close to the chest ( privately) by the different sales teams, I once tryed to get a GOOD price for a relative in an Asian port, the head of International sales told me, he could give me a good price but that airport had charges like , use of hydrant cart, cost for 1 man , cost for assistants, cost too hook up hydrant cart, cost to connect to aircraft, cost to set panel, cost to disconnect, and a whole array of other nonsensical fees.
Also the airport demanded a cut for every litre that went into the terminal as well as other charges after the event. So he just was not able to give a CHEAPER price as he had lost money on numerous refuels, he did say that airlines were easier because the airports all want to keep passenger numbers up and would reduce their charges as the passengers were slugged in the terminals which made up for the need to recover from the fuel rip offs.
My biggest problem has been AFTER HOURS CALL OUT FEE’s.
We don’t do these because I have seen too many heated arguments over ” I buy a million litres a year off XYZ INTERNATIONALand you want $200 AUD to come to work, just charge them” , well XYS INTRNATIONAL pay for labour form X am until Y pm then you go home, they don’t want to pay for 4 hours labor for 2 people to sell 29 litres of any fuel so the customer needs to cover that.
When you get to the aircraft after being called at 3.30 am get dressed go to work (40 minute drive in my case) open the terminal , QUALITY CHECK the fuel and equipment and go to the aircraft to be told I’m not paying charge the oil company or I will hit you you tend not to want to do it again, on one occasion the police arrested the pilot and the REFUELLER as they thought he was part of the drug ring they were busting,
So in closing let me say it may be worth asking or ringing ahead and having a quit word with the REFUELLER to see if they will be there but pricing that’s a job for a clairvoyant maybe, good luck and may all your winds be tail winds except on final approach

I’m glad you chimed in, RB — it’s good to get the perspective of a fuel service provider. I sometimes talk to the fuelers when I’m flying a light GA aircraft like a Cirrus or Extra 300, but unfortunately I don’t get to talk with the folks fueling the Gulfstream because a) we’re so busy, b) the noise of the APU makes it impractical, and c) there’s usually a line of other aircraft waiting to be serviced.

It’s interesting to learn that the pricing is as opaque to you as it is to us! As for the call out fees, I’ve never heard of anyone complaining about them. I wonder if that’s an Australian thing? Some FBOs are staffed (albeit minimally) overnight, but for those that can’t justify the cost, somebody has to pay the price of getting qualified line service out of bed at odd hours, so a fee seems more than justified.

This article reminds me of one trying to take a stab on how airline charges their customers for their seats. The article went on to say the following: “Say you were in line at the Carls Jr Drive through” and as you placed you placed your order, it was then you got the cost of your burger. The car ahead of you paid $3.19, you paid $4.50 and the guy behind you it was $1.99. I think the article eventually gave up and said there was a super computer somewhere with an algorithm, and left it at that, but your provided some real life insight to what can go into the fueling fees other than Cost per Gallon. Call Out After Hours Fee, Ramp Fee, Service Fee, Surcharge fee and my favorite (let me know if you ever see this one), “Fee Assessment Fee”

You actually got charged for a “fee assessment fee”? That’s amazing… not so much because of the ridiculous nature of the charge, but more so for the sheer laziness of whoever coined it.

They could have at least come up with something a bit more creative. Infrastructure fee, security assessment, facility improvement charge, possessory interest offset. At least that kind-of-sort-of sounds like a real “thing”. But they just gave up and decided to call it a fee for charging you other fees.

About the Author

Ron Rapp is a professional pilot, instructor, and aviation writer specializing in tailwheel, aerobatic, experimental, formation, and glass-panel flying. He's also an aircraft owner, aerobatic competitor, and a National-level judge. He and his wife live in beautiful Orange County, California with their son and an evil -- yet diabolically brilliant -- Siamese cat. (read more)